Joblessness is Ramaphosa’s problem to fix

Phumlani M. Majozi says tough action is needed from our President

The shocking unemployment is Ramaphosa’s problem to fix

“Unemployment is soaring. Even using a narrow definition, it stands at 26.4%, the highest since 2003.”, London’s The Economist wrote in 2015 when it covered South Africa’s economic mess. The economic mess that is still alive today.

This week, Statistics South Africa released unemployment numbers for the first quarter of 2019; and they were disheartening. The percentage of the unemployed continues to rise and is now at 27.6%.

Because of this consistent, shocking joblessness, South Africa ranked 3rd in Bloomberg’s Misery Index in 2018. According to Bloomberg, “The Bloomberg Misery Index relies on the age-old concept that low inflation and unemployment generally illustrate how good an economy’s residents should feel”.

This index is by no means a perfect measure – but it does give a rough idea of the seriousness of South Africa’s unemployment crises.

To understand how massive our unemployment is, compare it to other BRICS countries: Brazil, Russia, India and China. Brazil’s unemployment is 13%, Russia’s is 6%, India’s is 7.6%, and China’s is 5%. These are unemployment numbers we know about these countries. And the difference between theirs and ours is really embarrassing.

Our youth unemployment has risen, to 55%. And the fundamental question now is: Can Cyril Ramaphosa, South Africa’s president, reverse this disturbing unemployment trend? His party, the African National Congress (ANC) won South Africa’s 6th democratic election. So it is upon him now to forge ahead and create an environment that will be business friendly and create jobs.

Just after Ramaphosa took reins as president of the ANC at Nasrec in 2017, I argued that he must pursue Thatcherism – massive privatizations and other free-market reforms. Because that is the only way to speed economic growth and reduce this shocking unemployment. The private sector creates jobs – not government. The role of government is to create an environment that fuels private sector job-creation.

Ramaphosa must deregulate the labour market and abolish the unnecessary licence requirements that make it very hard to start a business in South Africa.

Over the past year, there was a theory that Ramaphosa could not pursue reforms because he had to keep the ANC united ahead of last week’s election. In other words his main priority was his party, not the country. To an extent that point was level-headed and I could understand it.

With the election now behind us, there should be no excuses for Cyril Ramaphosa. He’s the President of South Africa – our commander in chief. He has to move our country forward – and that means he will have to – in many instances – depart from the ludicrous policies that came out of the ANC’s elective conference in 2017.

This will require him to be tough – and he must do the unpopular stuff earliest in his presidency – while he’s still favourable amongst many South Africans.

Though his activism dates back to the days when he was a unionist, between mid-1990s and 2012 Ramaphosa was in business. So he should have an idea on what drives business growth in a way that encourages employment.

The cabinet Ramaphosa will put together by the end of this month will reflect his seriousness on addressing South Africa’s socioeconomic problems that include the staggering unemployment. The cabinet ought to be people who have not been accused of any public service scandals and who are not hostile to business.

South Africa needs fast, private-sector driven economic growth to reduce its unemployment. During the years of Nelson Mandela and Thabo Mbeki, South Africa experienced higher economic growth accompanied by relatively lower unemployment rate.

In his post-election analysis last week, Frans Cronje of the South African Institute of Race Relations wrote, “The path to growth – based on policies that secure a free, open and prosperous society – is open to us, and there is now no excuse for Cyril Ramaphosa’s government not to lead the way.”

I agree with Frans; there is now no excuse for Cyril Ramaphosa’s government not to lead the way on pro-growth reforms that will reduce our shocking unemployment levels. This is now Ramaphosa’s problem and he must fix it!

Phumlani M. Majozi is a politics and economics analyst, a senior fellow at AfricanLiberty.org, radio talk show host, and non-executive director at Free Market Foundation South Africa. Views expressed here are his own; not of the Free Market Foundation South Africa. Follow him on Twitter: @PhumlaniMMajozi.